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Important Information

Service Tax on Forex Transactions

 

All foreign currency conversion transactions will be subject to prevalent GST rates of the Government of India with effect from 01 July 2017. Value of service in case of purchase/sale of foreign currency to be determined per table below on which GST @18% be applicable. However, such transactions amongst banks or authorised dealers or between banks and dealers are exempted and not liable to GST.

Transaction Amount Value of Service on which GST to be paid
Less than or equal to INR 1,00,000 1% of the transaction amount, subject to minimum of INR 250/- i.e. minimum GST payable is Rs. 45.
Greater than INR 1,00,000 and less than or equal to INR 10,00,000 INR 1000 + 0.5% of the transaction amount
Greater than 10,00,000 INR 5,500 + 0.1% of the transaction amount, subject to maximum of INR 60,000/-, which caps GST payable at Rs. 10,800/-.

Please find above provision explained through below illustration:

  1. USD 3000 is sold to a customer at the rate Rs. 65 per USD. The gross amount of currency exchanged is Rs. 1,95,000/- Taxable value of supply = Rs. 1,000 + [(1,95,000-1,00,000)*0.5%] = Rs. 1,475/- GST payable = Rs. 1475 * 18% = Rs. 265.50/-
  2. USD 20000 is sold to a customer at the rate Rs. 65 per USD. The gross amount of currency exchanged is Rs. 13,00,000/- Taxable value of supply = Rs. 5500 + [(13,00,000-10,00,000)*0.1%] = Rs. 5,800/- GST payable = Rs. 5800 * 18% = Rs. 1,044/-